Ivory Coast faces uphill battle against counterfeit medicine

Markets tumble on Lehman Brothers' bankruptcy news

World markets are plummeting following US bank Lehman Brothers' announcement that it will file for bankruptcy. The Federal Reserve and a consortium of 10 global banks announced plans to supply $70 billion to help offset a credit squeeze.

Lehman Brothers filed for bankruptcy restructuring and investment bank Merrill Lynch was the target of a 50-billion-dollar rescue takeover as US titans fell or tottered in a vicious twist to a crisis now described as the worst since the crash of 1929.

The weight of news showing that the subprime aftershocks were far from over caused global stock markets to fall sharply and analysts to warn that the financial system in advanced countries was on a knife edge.

US President George W. Bush said he was working "to minimise" the impact of "painful" events in global markets.

Saying US capital markets would weather the shocks in the long run, he insisted that "we're working to reduce disruptions and minimise the impact of these financial market developments on the broader economy."

Unicredit economist Marco Annunziata in Frankfurt said: "The coming days and weeks will be truly crucial to the global economic outlook.

"The US Treasury has decided it was time for shock therapy, and taken an extremely gutsy gamble by letting Lehman fail."

Alan Greenspan, the former Federal Reserve chairman, said the United States was in a "once-in-a century" financial crisis.

"First of all, let's recognize that this is a once-in-a-half-century, probably once-in-a-century type of event," Greenspan said on ABC television.

"There's no question that this is in the process of outstripping anything I've seen and it still is not resolved and it still has a way to go," Greenspan said, adding that the country would be unlikely to escape recession now.

The US Federal Reserve bank provided funds to banks on easy terms, and the European Central Bank and Bank of England injected tens of billions of dollars to avert a domino effect, known as systemic failure.

But stock markets in the United States, Europe and Asia fell by 2.0-4.0 percent.

In a measure of the gravity of the drama, unfolding by the hour, US Treasury Secretary Henry Paulson insisted: "I am committed to working with regulators and policymakers ... to maintain the stability and orderliness of our financial markets.

The Federal Reserve said it was working to "identify potential market vulnerabilities," meaning watching to see where links in the financial system might break.

Another distress signal from the US financial system was a report that insurance giant AIG was looking for a huge emergency loan of 40 billion dollars.

And US banks dominated an international group of 10 banks announcing a 70-billion-dollar global fund to help finance companies in crisis.

The price of oil also dropped sharply below 93 dollars a barrel on prospects that this new chapter in the home-loan crisis would slow leading economies further and cut demand for oil.

The ECB and Bank of England tried to reassure markets by injecting funds, 30 billion euros (43 billion dollars) from the ECB and 5.0 billion pounds (9.0 billion dollars, 6.3 billion euros) from the British bank, into their banking systems.

The European Commission expressed confidence "of good coordination, as well as a solution" from central banks and other agencies.

"You've probably seen more in one day of financial history than we've seen since the great crash of 1929," Macquarie Private Wealth associate director Marcus Droga said.

"I'm not suggesting the US market will crash tonight, but in terms of landmark events, it's an historic day," Droga told Dow Jones Newswires.

But Nobel Prize-winning economist Joseph Stiglitz said the crisis now gripping financial markets should be less serious than that caused by the 1929 stock market crash in the United States, which led to the Great Depression.

"The general view is that we have instruments, monetary and fiscal policy, that we know how to prevent another great depression," he told AFP.

The head of the British Bankers' Association Angela Knight told AFP that Britain's commercial banking system was "safe and sound" and the German finance ministry said the effects of the Lehman failure on German banks were "manageable."

Last-ditch efforts to find a buyer collapsed Sunday. A London source at British bank Barclays said it walked away from negotiations because of concerns it would have to guarantee the 158-year-old US firm's trading commitments.

Bank of America said it was buying Merrill Lynch for 50 billion dollars in a transaction that creates the world's largest financial services company.

German finance ministry said links between German banks and Lehman Brothers were "manageable".

Japan's financial watchdog ordered Lehman Brothers' Japan unit to retain certain assets within Japan, it said in a statement.